Instead of going File>Save as... or File>Save, use File>Render as...
There you'll be able to save in whatever file format you want (both Video like avi and Audio like MP3).
Also sometimes it might not render the whole video, this has to do with a little "bar" above the videos. If it doesn't just drag that "bar" over or select the whole video.
EDIT: After reading your edit, I don't think it belongs here either because it isn't a Toribash-related issue/question. I was going to mention it but I forgot to do so anyways.
Last edited by Andrecova; Dec 31, 2007 at 07:12 PM.
Reason: Another edit.